State Tobacco Monopoly Administration: Planning to implement total volume management for electronic cigarette-related manufacturing companies

The National Tobacco Monopoly Administration publicly solicits comments on the “Notice of the National Tobacco Monopoly Administration on Revising Certain Regulatory Policy Documents for E-Cigarettes (Draft for Public Comment).”

Notice of the National Tobacco Monopoly Administration on Revising Certain Regulatory Policy Documents for E-Cigarettes (Draft for Public Comment)

To implement the requirements of the restrictive industrial policy for e-cigarettes, and to enhance the systematization, overall coherence, and mutual coordination of the e-cigarette regulatory policy framework, the National Tobacco Monopoly Administration has decided to revise certain provisions in seven e-cigarette regulatory policy documents. The relevant matters are hereby notified as follows.

一、Revising “Several Policy Measures for Advancing the Rule-of-Law and Standardization of the E-Cigarette Industry (Trial)” (Guo Yan Ban Fa〔2022〕43)

（一）Revise Article 1 to read: “The e-cigarette industry shall be brought under regulation in accordance with the law; the industry layout shall be scientific and rational; the market operation shall be stable and orderly; resource allocation shall be more efficient; total-quantity management shall be implemented under a dynamic balance of supply and demand; relevant requirements on tobacco control of the State shall be implemented; so that people’s health and safety are effectively protected, and the development of the e-cigarette industry proceeds on a path of legalization and standardization.”

（二）Revise Article 11 to read: “To achieve a balance between supply and demand in the e-cigarette market, total-quantity management shall be applied to production enterprises related to e-cigarettes, and production capacity and production scale shall be determined in accordance with the law and regulations. The State Council tobacco monopoly administrative department shall comprehensively consider factors such as tobacco control, approved production capacity, market demand, enterprise orders, and lawful and compliant operations, and classify and determine the annual production scale, to control it as the upper limit of the production-for-trading volume of corresponding product categories during the natural year. The provincial-level tobacco monopoly administrative department shall organize e-cigarette wholesale enterprises within its administrative region to conduct business activities within the target volume of domestic sales in the province (autonomous region/municipality) for that year.”

（三）Revise Article 14, paragraph 1 to read: “Coordinate domestic sales and export needs, and scientifically and rationally determine the annual production and sales scale of domestic e-cigarette nicotine. The State Council tobacco monopoly administrative department shall, based on the approved production capacity and production scale, coordinate matters such as deriving nicotine from tobacco leaves (including reconstituted tobacco leaves and tobacco stems), re-curing tobacco leaves, and tobacco strands (including shreds and granular form), and so on, including factors such as the nicotine extraction yield rate from the raw materials, to scientifically calculate the annual usage. Then it shall issue tobacco leaf (including reconstituted tobacco leaves and tobacco stems), re-curing tobacco leaves, and tobacco strands (including shreds and granular form), tobacco monopoly goods purchase and sales plans.”

二、Revising “Detailed Rules for the Management of Fixed-Asset Investment in E-Cigarettes” (Guo Yan Fa〔2024〕104)

（一）Revise Item (4) of paragraph 1 of Article 4 to read: “(4) fixed-asset investment activities such as original-site technical renovation (including the procurement of production equipment) implemented by permitted production enterprises; capacity integration and reorganization; relocation and reconstruction; restoration and reconstruction;”

（二）Revise Article 6 to read: “For the circumstances listed in Item (4) of paragraph 1 of Article 4 of these Detailed Rules, if the investment does not increase new production capacity for e-cigarette products and raw materials, an e-cigarette enterprise shall, prior to the occurrence of the investment activity, apply in accordance with the relevant requirements for the application report in Article 7 and the production capacity report in Article 18 of these Detailed Rules, and submit to the State Council tobacco monopoly administrative department for filing through the responsible tobacco monopoly administrative department at the place of operation, step by step, the following information of its own production and business, production equipment, and production capacity utilization status; the main contents of the proposed investment project and the amount of investment; and, for example, a commitment letter that does not expand capacity; among others. The implementation process of the project shall be supervised by the tobacco monopoly administrative department at the place of operation. After the project is completed, the enterprise shall report, through the tobacco monopoly administrative department at the place of operation, step by step, to the State Council tobacco monopoly administrative department the project construction circumstances.”

（三）Revise Item (2) of paragraph 2 of Article 7 to read: “(2) basic information of the proposed investment project, including the project location, project contents, newly formed production capacity, total investment scale, etc.”

（四）Revise Item (2) of Item (4) of paragraph 2 of Article 7 to read: “2. the enterprise’s actual production and sales over the most recent 36 months, together with relevant supporting documents. Among them, for export sales, transaction contracts and customs declaration documents shall be provided;” and revise Item (3) to read: “3. the opinions regarding the enterprise’s compliance with laws and regulations on tobacco monopoly administration issued by the provincial-level tobacco monopoly administrative department at the place of operation, and the review opinions on the project application report.”

（五）Revise Item (3) of Article 10 to read: “(3) the enterprise’s actual production over the most recent 12 months has not reached 85% of its most recent reported equipment production capacity to the State Council tobacco monopoly administrative department, and the enterprise’s actual production over the most recent 36 months has not reached 85% of the production capacity approved by the State Council tobacco monopoly administrative department.”

三、Revising “Detailed Rules for the Technical Evaluation and Review of E-Cigarette Products” (Guo Yan Fa〔2024〕120)

（一）Add an item as Item (3) of paragraph 1 of Article 6 to read: “(3) a domestic sales brand-holder enterprise that lawfully obtains an e-cigarette production enterprise license;”

（二）Revise Item (4) of paragraph 1 of Article 6 to read: “(4) meets the requirements of national e-cigarette industrial policies and relevant management provisions such as approved production capacity and production scale;”

（三）Revise paragraph 3 of Article 6 to read: “When handling applications for overseas brand-holding enterprises, the conditions in Items (1), (4), and (6) of the preceding paragraph shall be met.”

（四）Revise Item (3) of paragraph 1 of Article 8 to read: “(3) complies with the relevant provisions on the naming of e-cigarette products, packaging identification, and warning statements;”

（五）Revise Item (3) of paragraph 21 to read: “(3) entrusts production to an enterprise that has not obtained an e-cigarette tobacco monopoly production enterprise license, or entrusts production where the entrusted production business does not comply with the approved production capacity and approved production scale;”

（六）Add an item as Item (5) of paragraph 21 to read: “(5) violates requirements on e-cigarette product naming;”

四、Revising “Detailed Rules for the Administration of E-Cigarette Product Traceability” (Guo Yan Ban〔2022〕43)

（一）Revise Article 9 to read: “E-cigarette production enterprises (including product production, contract manufacturing, brand-holding enterprises, etc., the same shall apply hereinafter) and e-cigarette wholesale enterprises, when applying for, uploading, querying, and scrapping e-cigarette product QR codes, shall use the e-cigarette traceability platform.”

（二）Revise Article 14 to read: “E-cigarette production enterprises and e-cigarette wholesale enterprises shall establish improved supporting systems and necessary facilities for implementing traceability management, and within the scope of approved permits and approved production capacity (excluding this item for brand-holding enterprises) and approved production scale approved by the State Council tobacco monopoly administrative department, they shall apply for and use QR codes for e-cigarette products.”

（三）Revise “e-cigarette production enterprises” in paragraph 1 of Article 15 to read: “e-cigarette product production enterprises and brand-holding enterprises that have obtained the license qualification for domestic sales of e-cigarettes.”

（四）Revise Item (3) of paragraph 1 of Article 15 to read: “(3) regarding transaction contracts with e-cigarette wholesale enterprises, and if the production is entrusted, it is also necessary to provide the transaction contracts with the e-cigarette contract manufacturing enterprises.”

（五）Revise Article 17 to read: “E-cigarette production enterprises shall, according to relevant requirements, mark QR codes for e-cigarettes on the external packaging of e-cigarette products; the QR code information shall be consistent with the information of the e-cigarette product physical items. QR codes that were not used in previous years by an e-cigarette production enterprise shall be carried over for use in the current year. QR codes that are no longer to be used shall be subject to an application for scrapping. The total number of QR codes available for the whole year (including carried-over codes) shall not exceed the approved production capacity (excluding this item for brand-holding enterprises) and the approved production scale.”

五、Revising “Detailed Rules for the Administration of E-Cigarette Import and Export Trade and Foreign Economic and Technological Cooperation” (Guo Yan Fa〔2022〕125)

（一）Revise paragraph 1 of Article 11 to read: “E-cigarette production enterprises (including product production, contract manufacturing, brand-holding enterprises, etc.), e-liquid production enterprises, and e-cigarette nicotine production enterprises, etc. (hereinafter referred to as relevant production enterprises for e-cigarettes), shall produce and operate e-cigarette products and raw materials for export within the approved scope of permits, approved production capacity (excluding this item for brand-holding enterprises), and the approved export production scale.”

（二）Revise paragraph 2 of Article 11 to read: “For overseas order demands that exceed the approved export production scale, enterprises may organize relevant production and sales only after completing the relevant procedures on the e-cigarette transaction management platform in accordance with the relevant provisions of the National Tobacco Monopoly Administration and obtaining approval.”

六、Revising “Detailed Rules for the Administration of the Establishment, Division, Merger, and Deregistration of Relevant Production Enterprises for E-Cigarettes” (Guo Yan Ban〔2022〕104)

（一）Revise paragraph 2 of Article 22 to read: “After division and merger of relevant production enterprises for e-cigarettes, the enterprises shall reapply for tobacco monopoly production enterprise licenses. If fixed-asset investments, approved production capacity, and approved production scale related to e-cigarettes are involved, matters shall be handled in accordance with the relevant provisions of the State Council tobacco monopoly administrative department.”

七、Revising “Part 2: E-Cigarettes of E-Certificates for Tobacco Monopoly Production Enterprise Licenses on the Integrated Government Services Platform” (Guo Yan Ban Zong〔2024〕25)

（一）Revise “production scale” in 5.1, 7.1.1, and 7.2 to “approved production capacity.”

（二）Revise 5.5.3 to 5.5.3 approved production capacity

Chinese name: approved production capacity;

English name: approved production capacity;

Short name: HDCN;

Description: Enterprises that obtain a tobacco monopoly production enterprise license (for e-cigarettes) have information on approved production capacity for the annual production and business operations of nicotine for e-cigarettes, e-liquids, and e-cigarette products;

Value type and format: C…1000;

Value range: free text, determined and administered by the National Tobacco Monopoly Administration in accordance with the requirements for total-quantity management under dynamic balance of supply and demand for e-cigarettes;

Constraint conditions: required;

“Value example: nicotine for e-cigarettes not exceeding 1.0 ton/year”

In addition, relevant adjustments shall be made to the numbering of provisions, punctuation, and other elements in the related documents.

These Measures shall come into effect as of the date of issuance.

“Several Policy Measures for Advancing the Rule-of-Law and Standardization of the E-Cigarette Industry (Trial)”“Detailed Rules for the Management of Fixed-Asset Investment in E-Cigarettes”“Detailed Rules for the Technical Evaluation and Review of E-Cigarette Products”“Detailed Rules for the Administration of E-Cigarette Product Traceability”“Detailed Rules for the Administration of E-Cigarette Import and Export Trade and Foreign Economic and Technological Cooperation”“Detailed Rules for the Administration of the Establishment, Division, Merger, and Deregistration of Relevant Production Enterprises for E-Cigarettes”“Part 2: E-Cigarettes of E-Certificates for Tobacco Monopoly Production Enterprise Licenses on the Integrated Government Services Platform” shall be amended accordingly pursuant to this Notice and the order of provisions shall be adjusted accordingly, and the documents shall be republished.

（Source: Jiemian News）